India's telecom revenue projected to plunge 33% in FY26: Budget 2025 documents

telecom

Telecom revenue for the Indian government is projected to plummet by over 33 percent to Rs 82,442.84 crore in FY26, down from Rs 1,23,357.20 crore in the current fiscal year, according to budget documents. This significant decrease is anticipated despite upcoming regulatory payments from telecom operators for deferred spectrum and AGR dues after the moratorium ends in September 2025.

The government's telecom revenue primarily consists of license fees and spectrum usage charges (SUC), both calculated based on telcos' adjusted gross revenue (AGR).

While operators pay 8 percent of their AGR as license fees, SUC, previously around 3-4 percent, has fallen to under 1 percent after removing the 3 percent floor and the government's decision to waive SUC for spectrum acquired after July 2022. Revenue from captive telecom networks is generated through fixed license fees and a small one-time entry fee.

The higher revenue in FY25 is attributed to spectrum allocations to BSNL and the Railways, substantial advance payments from Bharti Airtel for past spectrum auctions, and proceeds from the second 5G spectrum sale. A portion of the Rs 11,340.78 crore raised from this 5G auction was also included in FY25's revenue.

"...there is a reduction in the FY26 Budget Receipt for the telecoms sector by 33% as compared to FY25. This potentially indicates lower spectrum usage charges and one-time spectrum fees to be paid by operators. Since operators have sufficient 4G and 5G spectrum, spectrum auction is unlikely in FY26," said Prashant Singhal, Markets Leader and Telecommunications Sector Leader at EY India.

The Union Budget 2025 has placed significant importance on developing the country's digital infrastructure. BharatNet allocation has been substantially increased by 238 percent y-o-y to Rs 22,000 crores in FY26. "This is expected to boost high-speed internet access in rural areas, especially with all government-run secondary schools and primary healthcare centres (PHCs) being covered under the scheme," Singhal added.